Polyethylene Terephthalate Film, Sheet, and Strip from Japan; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-588-814]

Polyethylene Terephthalate Film, Sheet, and Strip from Japan;

Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration/International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of Antidumping Duty

Administrative Review.

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SUMMARY: In response to requests from one respondent and one U.S.

producer the Department of Commerce has conducted an administrative

review of the antidumping duty order on polyethylene terephthalate

film, sheet, and strip (PET film) from Japan. The review covers three

manufacturers/exporters of this merchandise to the United States and

the period November 30, 1990, through May 31, 1992. We preliminarily

determine that margins exist for the period.

Interested parties are invited to comment on these preliminary

results.

EFFECTIVE DATE: March 2, 1994.

FOR FURTHER INFORMATION CONTACT: Arthur N. DuBois, or Thomas F.

Futtner, Office of Antidumping Compliance, International Trade

Administration, U.S. Department of Commerce, Washington, DC 20230,

telephone: (202) 482-6312/3814.

SUPPLEMENTARY INFORMATION:

Background

On June 8, 1992, the Department of Commerce (the Department)

published a notice of ``Opportunity to Request an Administrative

Review'' (57 FR 24244) of the antidumping duty order on PET film (56 FR

25660, June 5, 1991). On June 30, 1992, one respondent, Toray

Industries Inc. (Toray), requested an administrative review and one

U.S. producer, Toray Plastics America (TPA) (see Decision Memorandum

dated December 28, 1992, regarding Toray's status as a producer in the

United States), requested an administrative review for two other

Japanese manufacturers/exporters of PET film. We initiated the review

on Toray, covering November 30, 1990, through May 31, 1992, on July 22,

1992 (57 FR 32521) and the reviews on Teijin, Ltd. (Teijin) and Diafoil

Co. Ltd. (Diafoil), on August 26, 1992 (57 FR 38668). The Department

has now conducted the review in accordance with section 751 of the

Tariff Act of 1930, as amended (the Tariff Act).

Scope of the Review

Imports covered by the review are shipments of all gauges of raw,

pretreated, or primed PET film, whether extruded or co-extruded. The

films excluded from the scope of this order are metallized films and

other finished films that have had at least one of their surfaces

modified by the application of performance-enhancing resin or inorganic

layer more than 0.00001 inches (0.054 micrometers) thick. Roller

transport cleaning film which has at least one of its surfaces modified

by the application of 0.5 micrometers of SBR latex has also been ruled

as not within the scope of the order.

PET film is currently classifiable under Harmonized Tariff Schedule

(HTS) subheading 3920.62.00.00. The HTS subheading is provided for

convenience and for Customs purposes. The written description remains

dispositive.

The review covers three Japanese manufacturers/exporters of this

merchandise to the United States, Toray, Teijin, and Diafoil, and the

period November 30, 1990, through May 31, 1992.

Such or Similar Comparisons

As stated in the less-than-fair-value (LTFV) investigation, we have

determined that the subject merchandise constitutes a single class or

kind of merchandise. Each company had sufficient home market sales of

PET film to unrelated customers to serve as a basis for calculating

foreign market value (FMV).

Best Information Available

Diafoil did not respond to the Department's questionnaire.

Therefore, we are using best information available for the purposes of

this review. As best information for Diafoil, we preliminarily

determine the dumping margin to be 14.00 percent, the highest margin

calculated in the original investigation.

United States Price

For Toray, we calculated the United States price based on purchase

price as all U.S. sales were made to unrelated parties prior to

importation into the United States, in accordance with section 772(b)

of the Tariff Act.

For Toray, we calculated purchase price based on f.o.b. Japanese

port or delivered U.S. customer prices. We made deductions, where

appropriate, for price adjustments (rebates). We also made deductions,

where appropriate, for the costs of foreign inland freight,

containerization, warehousing, credit expense, foreign brokerage and

handling, ocean freight, marine insurance, U.S. duty, U.S. brokerage

and handling, and U.S. inland freight in accordance with section

772(d)(2) of the Tariff Act.

For Teijin, we calculated purchase price based on f.o.b. Japanese

port or delivered U.S. customer prices. We made deductions, where

appropriate, for price adjustments (rebates). We also made deductions,

where appropriate, for the costs of foreign inland freight and

insurance, bank charges, foreign brokerage and handling, ocean freight,

warehousing, commissions, credit insurance, indirect selling expenses

(U.S. and non-U.S.), inventory carrying charges, other expense, U.S.

duty, harbor and U.S. Customs user fees, U.S. brokerage and handling,

and U.S. inland freight and insurance in accordance with section

772(d)(2) of the Tariff Act.

In addition, for both Toray and Teijin, we made adjustments for the

value added tax applied in the home market. On October 7, 1993, the

United States Court of International Trade (CIT), in Federal-Mogul

Corp. and The Torrington Co. v. United States, Slip Op. 93-194 (CIT,

October 7, 1993), rejected the Department's methodology for calculating

an addition to U. S. price (USP) under section 772(d)(1)(C) of the

Tariff Act to account for taxes that the exporting country would have

assessed on the merchandise had it been sold in the home market. The

CIT held that the addition to USP under section 772(d)(1)(C) of the

Tariff Act should be the result of applying the foreign market tax rate

to the price of the United States merchandise at the same point the

chain of commerce that the foreign market tax was applied to foreign

market sales. Federal-Mogul, Slip Op. 93-194 at 12.

The Department has changed its methodology in accordance with the

Federal-Mogul decision. The Department will add to USP the result of

multiplying the foreign market tax rate by the price of the United

States merchandise at the same point in the chain of commerce that the

foreign market tax was applied to foreign market sales. The Department

will also adjust the USP tax adjustment and the amount of tax included

in FMV. These adjustments will deduct the portions of the foreign

market tax and the USP tax adjustment that are the result of expenses

that are included in the foreign market price used to calculate the

foreign market tax and are included in the United States merchandise

price used to calculate the USP tax adjustment and that are later

deducted to calculate FMV and USP. These adjustments to the amount of

the foreign market tax and the USP tax adjustment are necessary to

prevent our new methodology for calculating the USP tax adjustment from

creating antidumping duty margins where no margins would exist if no

taxes were levied upon foreign market sales.

This margin creation effect is due to the fact that the bases for

calculating both the amount of tax included in the price of the foreign

market merchandise and the amount of the USP tax adjustment include

many expenses that are later deducted when calculating USP and FMV.

After these deductions are made, the amount of tax included in FMV and

the USP tax adjustment still reflects the amounts of these expenses.

Thus, a margin may be created that is not dependent upon a difference

between USP and FMV, but is the result of the price of the United

States merchandise containing more expenses that the price of the

foreign market merchandise The Department's policy to avoid the margin

creation effect is in accordance with the United States Court of

Appeals' holding that the application of the USP tax adjustment under

section 772(d)(1)(C) of the Tariff Act should not create an antidumping

duty margin if pre-tax FMV does exceed USP. Zenith Electronics Corp. v.

United States, 988 F.2d 1573, 1581 (Fed. Cir. 1993). In addition, the

CIT has specifically held that an adjustment should be made to mitigate

the impact of expenses that are deducted from FMV and USP upon the USP

tax adjustment and the amount of tax included in FMV. Daewoo

Electronics Co., Ltd. v. United States, 7609 F. Supp. 200, 208 (CIT,

1991). However, the mechanics of the Department's adjustment and the

foreign market tax amount as described above are not identical to those

suggested in Daewoo.

Foreign Market Value

In order to determine whether there were sufficient sales of PET

film in the home market to serve as a viable basis for calculating

foreign market value (FMV), we compared the volume of home market sales

of PET film to the volume of third country sales of PET film, in

accordance with section 773(a)(1)(B) of Tariff Act. Each respondent had

a viable home market with respect to sales of PET film made during the

period of review.

For Toray, we calculated the FMV based on delivered prices to

unrelated customers in the home market. We did not use related party

sales because the prices to related parties were determined not to be

at arm's length, in accordance with 19 CFR 353.45(a). We made

deductions, where appropriate, for rebates and inland freight. We

deducted home market packing cost and added U.S. packing costs.

Pursuant to section 353.56, we made circumstance-of-sale

adjustments, where appropriate, for differences in claimed warranty

expenses, post-sale warehousing expenses, credit expenses, and credit

interest revenue.

We made a difference-in-merchandise adjustment, where appropriate,

based on differences in the variable costs of manufacture.

For Teijin, we calculated FMV based on delivered prices to

unrelated and three related customers in the home market. These related

party sales were determined to be at arm's length, in accordance with

section 353.45(a) of our regulations. We made deductions, where

appropriate, for rebates, inland freight, and insurance. We deducted

home market packing cost and added U.S. packing costs.

Pursuant to 19 CFR 353.56, we made circumstance-of-sale

adjustments, where appropriate, for differences in post-sale

warehousing expenses, and credit expenses.

For both Toray and Teijin, in order to simplify analysis, we

decided to test the home markets sales to determine whether we could

use annual FMVs as a basis of comparison to U.S. sales. To determine

whether a period of review (POR) weighted-average price was

representative of the transactions under consideration we performed a

three-step test.

We first compared the monthly weighted-average home market price

for each model with the weighted-average POR price of that model. We

calculated the proportion of each model's sales whose POR weighted-

average price did not vary more than plus or minus ten percent from the

monthly weighted-average prices. We did this test for each model. We

then compared the volume of sales of all models of whose POR weighted-

average price did not vary more than plus or minus ten percent from the

monthly weighted-average price from the total volume of sales. If the

POR weighted-average price of at least 90 percent of sales did not vary

more than plus or minus ten percent from the monthly weighted-average

price, we consider the POR weighted-average price to be representative

of the sales under consideration. Finally, we tested whether there was

any correlation between fluctuations in price and time for each model.

Where the correlation was less than 0.05 (where a coefficient

approaching 1.0 indicates a direct relationship between price and

time), we concluded that there was no significant relationship between

price and time. Since home market prices of both companies passed all

of these tests we used annual FMV's as a basis of comparison for both

companies.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that the

following margins exist for the period November 30, 1990, through May

31, 1992:

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Margin

Manufacturer/producer/exporter (percent)

------------------------------------------------------------------------

Toray...................................................... 4.76

Diafoil.................................................... 14.00

Teijin..................................................... 5.73

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Case briefs and/or written comments from interested parties may be

submitted no later than 30 days after the date of publication of this

notice. Rebuttal briefs and rebuttals to written comments, limited to

issues raised in the case briefs and comments, may be filed not later

than 37 days after the date of publication of this notice.

Within 10 days of the date of publication of this notice,

interested parties to this proceeding may request a disclosure and/or a

hearing. The hearing, if requested, will take place not later than 44

days after publication of this notice. Persons interested in attending

the hearing should contact the Department for the date and time of the

hearing.

The Department will subsequently publish the final results of this

administrative review, including the results of its analysis of issues

raised in any such written comments or a hearing.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between United States price and foreign market value may

vary from the percentages stated above. The Department will issue

appropriate appraisement instructions directly to the Customs Service

upon completion of this review.

Furthermore, the following deposit requirements will be effective

upon publication of our final results of review for all shipments of

the subject merchandise entered, or withdrawn from warehouse, for

consumption on or after that publication date of the final results of

this administrative review, as provided by section 751(a)(1) of the

Tariff Act:

(1) The cash deposit rate for the reviewed companies will be those

rates established in the final results of this review;

(2) The cash deposit rate for subject merchandise exported by

manufacturers or exporters not covered in this review but covered in

previous reviews or in the original LTFV investigation will be based

upon the most recently published rate in a final result or

determination for which the manufacturer or exporter received a

company-specific rate;

(3) The cash deposit rate for subject merchandise exported by an

exporter not covered in this review, a prior review, or the original

investigation, but where the manufacturer of the merchandise has been

covered by this or a prior final results or determination will be based

upon the most recently published company-specific rate for that

manufacturer, and

(4) The cash deposit rate for merchandise exported by all other

manufacturers and exporters who are not covered by these or any

previous administrative review conducted by the Department will be the

``all others'' rate established in the LTFV investigation.

On March 25, 1993, the Court of International Trade (CIT), in

Floral Trade Council v. United States, Slip Op. 93-79, and Federal-

Mogul Corporation v. United States, Slip Op. 93-83, decided that once

an ``all others'' rates is established for a company, it can only be

changed through an administrative review. The Department has determined

that in order to implement these decisions, it is appropriate to

reinstate the original ``all others'' rate from the LTFV investigation

(or that rate as amended for correction of clerical errors or as a

result of litigation) in the proceeding governed by antidumping duty

orders.

Because this proceeding is governed by an antidumping duty order,

the ``all others'' rate for the purposes of this review will be 6.32

percent, the ``all others'' rate established in the LTFV investigation

(56 FR 25660, June 5, 1991).

These deposit requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 353.26 to file a certificate

regarding the reimbursement of antidumping duties prior to liquidation

of the relevant entries during this review period. Failure to comply

with this requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

section 751(a)(1) of the Tariff Act and 19 CFR 353.22.

Dated: February 22, 1994.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-4775 Filed 3-2-94; 8:45 am]

BILLING CODE 3510-DS-P